STRICTLY CONFIDENTIAL

UBS Technology M&A
Discussion of Current Industry Trends

March 2005

[yuanni] [printed: 03/14/05 17:59] [saved: 03/14/05 18:01] S:\intc\M&A\Projects\2005\Seth Conference\Merrill Corp Presentation_ppt.ppt Table of Contents SECTION 1 SECTION 2 SECTION 3 M&A Market Conditions M&A Drivers and Considerations UBS Overview 2 8 14 1 .

SECTION 1 M&A Market Conditions .

Cingular / AT&T Wireless. Symantec / Veritas. Johnson & Johnson / Guidant and Wachovia / SunTrust j Significant financial sponsor activity in the middle market ± Taking advantage of depressed market conditions and attractive debt markets 1.411 1.328 1. Sprint / Nextel.ppt M&A Volume in the US Current rebound in activity across all industries is reflective of a return to a healthier market j Large.045 1.250 1.[yuanni] [printed: 03/14/05 17:59] [saved: 03/14/05 18:01] S:\intc\M&A\Projects\2005\Seth Conference\Merrill Corp Presentation_ppt.219 1. Oracle / PeopleSoft. strategic combinations are back²Proctor & Gamble / Gillette. 2003 ($ in billion) 750 608 530 500 407 296 250 97 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 110 116 154 529 433 Source: Securities Data Corporation 3 .000 Volume up 41% in 2004 vs.500 1. JPMorgan / BankOne.

[yuanni] [printed: 03/14/05 17:59] [saved: 03/14/05 18:01] S:\intc\M&A\Projects\2005\Seth Conference\Merrill Corp Presentation_ppt.133 $485 95 > $10bn $1bn .500 2.000 $103 $65 19 46 2002 2002 1.ppt Technology M&A Activity Technology M&A olume Has Increased Steadily Since 2002 Lows 500 450 400 350 Deal Value (US$ Billions) $311 300 65 250 200 150 100 50 58 0 1997 1997 No. of Deals 1.648 1.$10bn < $1bn No.500 $143 25 $85 26 60 148 $124 24 157 98 36 65 2000 2000 2.329 22 15 65 500 58 1998 1998 1. of Deals 233 1.705 2004 2004 1.508 Source: Securities Data Corporation Note: Oracle/PeopleSoft included as 2004 transaction. of Deals 3.000 No.409 0 1999 1999 1.318 $64 17 47 2003 2003 1.862 2001 2001 1.000 2. original hostile offer was first launched in Q3 2003 4 .

original hostile offer was first launched in Q2 2003 5 .[yuanni] [printed: 03/14/05 17:59] [saved: 03/14/05 18:01] S:\intc\M&A\Projects\2005\Seth Conference\Merrill Corp Presentation_ppt.2 j 179 additional transactions were announced in 2004 compared with 2003 j Volume of discussions has intensified drastically Source: Security Data Corporation Note: 1 Oracle/PeopleSoft included as 2004 transaction.9 (1% ) 60% 102.ppt M&A Deal Activity is Intensifying Market recovery in 2003 and stability in 2004 have increased cor orate confidence and created an environment conducive to M&A transactions j Technology companies are exiting defensive. "survive the downturn" mentality and reviewing strategic options ± Recalibrating under invested businesses ± Capturing upside as economic conditions continue to improve j Technology M&A deal volume increased 60% in 2004 ± M&A pipeline is expected to be strong for 2005 Number of Announced Transactions 1 500 400 300 200 100 Q1 Q2 Q3 2003 Q4 Q1 Q2 2004 Q3 Q4 281 325 352 371 399 370 394 345 Technology M&A Deal olume (US$ Billions) 1 120 100 80 60 40 2002 2003 2004 $64.6 $64.

/ rtisan and the c pleti n f racle/ eopleSoft RECENT TRANSACTI NS j I / scential ( . arbug Pincus / S PLM from S( . cash consideration has een linked to stock consideration as acquirors tap into the equity markets to raise funds for acquisitions Improvements in capital markets have allowed companies to raise cash at a low cost through converti les or straight equity j Private equity players continue to show interest in acquiring technology companies Some technology stocks have enjoyed only limited participation in the market recovery ow interest rates have enabled private equity players to borrow at low costs to fund acquisitions The downturn has created companies with lower cost structures and higher profitability The recent market recovery has provided private equity players with better exit opportunities { q y | ptp nm w z r j j Private Equity Activity arlyle / Insight ( .[yuanni] [printed: 03/14/05 17:59] [saved: 03/14/05 18:01] S:\intc\M&A\Projects\2005\Seth Conference\Merrill Corp Presentation_ppt. ) . mm) s r l o pp nm w ptxm l q v utm q l j j j j ih”’ g f f ˆ Stock Consideration “ ”™™’ ”™˜’ “ –• ” ’ e ‘ — d q ) 332 15 2 @ A6@ % 4 332 …„ 9 ! 87 %  Resur ence in Deal Acti it e om / TippingPoint ( mm) j redence / PTest ( mm) j Serena / erant ( mm) j isco / etSolve ( mm) j m) j Symantec / eritas ( j . they are seeking opportunities to expand product offerings. acquire new technology and achieve critical mass egulatory environments created product opportunities for acquirors and at the same time forced smaller listed firms to re-assess the pros and cons of operating on a standalone asis j Stock consideration has ecome a more favorable A currency as technology stock prices have recovered ost technology companies have een trading at or close to their three -year highs j In some recent deals.ppt Current Trends in Technology M&A TREND VERVIEW ri j A recover in technology stock prices and increased corporate confidence cti ity p i s r structur t ir usi sses i creased ear i s panies are eager t ake acquisiti ns t capture upside as arket c nditi ns i pr arked t e return of the Technology A ³ ega-deals´ j eals er illi n represented f deal alue in . j Sy antec / eritas ( j enovo roup / I ( . ) D XW ED PPH TS RH G PPIIH H G ¦¤£ ¥ ¤£¢¡ £     ¦ ¦ ¦ ¥¦¢  gf  ¤¦ $ 10)  ˆ ¤¡ ¤ ¥ C $ $ 8$ B $ 6 $ ' %$ # " ( & ¡      ¤ ¤£¢¡ ¤ ¦¢   £ ¢© ¨§ ƒ  ‡ † p i h k j j ‰   ) usiness ) 6 . mm) j Safenet / ainbow ( mm) j redence / PTest ( mm) Issued convertible j Serena / erant ( mm) Issued convertible  ‚r t x s vwrt € ryyt x s wvut sr d PPRReG F E F PPIIR IH G W c PPbH a RG Y PPH S`G Y FX PPIIR H G U V P Q F ED ) . ) . mm) olden ate apital / lue artini ( mm) j eritas apital / ynCorp from CSC ( mm) j ain Capital. Silver ake Partners. ersus in eturn f landscape shaping deals such as y antec/ eritas. ) j / etegrity ( j Juniper / etscreen ( j racle / eoplesoft ( j / rtisan ( j j j Sector Consolidation j Sector consolidation continues to drive A s companies refocus on growth.

000 ~ ƒ ~ . 00 .40 € ƒ ~ ƒ ‚~ € ~ 2.000 30 2. 0 No. 2 0 .ppt M&A and IPO Activity in the Technology Sector Number of Announced M&A Transactions and IPO Filings 3. 0 .3 . original hostile offer was first launched in Q3 2003 ~ 2000 200 2002 2003 ~ ~  23 2 2004 ƒ 00 0 ~  ~  ~ . of IPOs Filed 200 ƒ ƒ ƒ €  0 00 0 7   ~ ‚ ~  ~~ ƒ ƒ ƒ ~ ~ . 4 300 23 . 00 eals 3 0 2. 33 24 00 0 0 M&A IPO Source: Securities Data Corporation and UBS E uity Capital Markets Group Note: Oracle/PeopleSoft included as 2004 M&A transaction.000 2 No. of Announced M&A .[yuanni] [printed: 03/14/05 17:59] [saved: 03/14/05 18:01] S:\intc\M&A\Projects\2005\Seth Conference\Merrill Corp Presentation_ppt.32  ~ ~ € ~ € } ~ .

SECTION 2 M&A Drivers and Considerations .

[yuanni] [printed: 03/14/05 17:59] [saved: 03/14/05 18:01] S:\intc\M&A\Projects\2005\Seth Conference\Merrill Corp Presentation_ppt.ppt Principal Drivers of Technology M&A j Critical mass and financial strength Achieve Scale j Customer leverage j Increased distribution and sales support j Market position consolidation j Leapfrog competition j New market entry product or geography Expand Product ffering j Capture new customer bases j uy vs. make j time to market j ngineering talent and/or management acquisition ff-income statement j Fill product gaps Offer Complete Solution j Capitalize on installed base j ccelerate time to market j Strengthen channel partnerships j ffer one-stop shop 9 .

[yuanni] [printed: 03/14/05 17:59] [saved: 03/14/05 18:01] S:\intc\M&A\Projects\2005\Seth Conference\Merrill Corp Presentation_ppt. markets or products j Transaction multiples compared to public comparables and precedent transa ctions Financial Considerations j Impact on combined company revenue and earnings growth trajectories j ffect on margins j evenue and cost synergies j PS accretion / dilution j Market perception of target company / merger partner M arket Reaction j Consistent. simple to understand story j Financial parameter clarity j Price paid / consideration mix j Time to closure Execution Risk j nti-trust / regulatory j Tight contract terms j Integration strategy 10 .ppt M&A Considerations A number of factors to consider in ursuing any M&A transaction Business Rationale j Compelling strategic rationale j Create or consolidate market leadership position j ssential new technologies.

ppt Process Considerations Public Offering ersus Sale Initial Public Offering PROS: j Primary shareholders retain voting control and existing management continues to execute the strategic vision of the business j Proceeds from an IPO can be used to increase scale through ac uisitions or fuel organic growth j Shareholders can participate in potential upside should the business continue to execute and market conditions remain favorable CONS j The organization must take on the costs associated with public filing and compliance re uirements while managing greater scrutiny by investors j An IPO lock-up prevents current shareholders from achieving immediate li uidity j There is a high degree of uncertainty in future capital market conditions j There is the potential for a downside in valuation should the business lose traction PROS: Sale of Business j Reduces or eliminates execution risks of the current business plan as well as future capital market uncertainties j M&A valuation includes control premium j Can offer a more immediate path to li uidity for current shareholders j Avoids the costs associated with being a public company j Partnering increases opportunity to cross-sell and up-sell through larger distribution platform and gain rapid critical mass to better compete CONS: j Primary shareholders relin uish voting control and new management executes the strategic vision of the company j Cash transactions eliminate the upside participation in the pro forma company j Integration and execution risk of combined business 11 .[yuanni] [printed: 03/14/05 17:59] [saved: 03/14/05 18:01] S:\intc\M&A\Projects\2005\Seth Conference\Merrill Corp Presentation_ppt.

IT S ending Mix for SOX Com liance 4 000 3 500 3 000 2 500 2 000 1 500 1 000 500 0 2003 Antici ated Technology S ending to Su Com liance Security ort SOX … „ „ „ illions) Source: Gartner 2004 estimates Source: Forrester Research survey of 454 technology decision-makers „ „ „ „ „ 0 10 20 30 40 50 … Š 2004 Advisory Services 2005 200 IT Spendin 2007 „ P 30 „ usiness ntelli ence 3 „ ecord Mana e ent 39 $ „ Process Control 40 „ 0 70 12 Stora e 52 „ … ‡† Š Š ‹ Š ‰ ˆ ‡ … Œ Œ Œ Œ Œ Œ Œ 1 . especially small cap companies j Entails significant allocation of resources j Not meeting SOX deadline re uirements or announcing inade uacies in significant controls can have negative effect on stock price ± UTStarcom ± Chordiant Software ± Interpublic Group Advisory Services s. public markets j Drives greater consistency and transparency in reported filings j Increased executive accountability over financial reporting j Increased spending at the CFO and CTO level to meet compliance criteria Costs j Increased cost of being public.S.[yuanni] [printed: 03/14/05 17:59] [saved: 03/14/05 18:01] S:\intc\M&A\Projects\2005\Seth Conference\Merrill Corp Presentation_ppt.ppt Sarbanes-Oxley 404 Compliance Benefits j Intended to restore investor confidence in U.

ppt Typical Timing of an M&A Transaction Illustrative Timeline of a Sell-Side Controlled Auction Engagement Weeks Activity Action Organizational meetings 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Due Diligence and Pre aration Due diligence meetings Information Memorandum Preparation of management presentation Finalize buyer list Initiate contact with buyers Marketing Negotiations and Closing  Deliver Information Memorandum Finalize management presentation and data room Buyer due diligence Receipt and review of final proposals Negotiate and sign definitive agreement Closing 13 .[yuanni] [printed: 03/14/05 17:59] [saved: 03/14/05 18:01] S:\intc\M&A\Projects\2005\Seth Conference\Merrill Corp Presentation_ppt.

SECTION 3 UBS Overview .

source of roughly half the global investment banking fee pool. In the 12 months ending in April 2004. a Wall Street powerhouse? Oh Yes. This is a house« that¶s grown out of its regional shell to assume premier proportions in world finance.[yuanni] [printed: 03/14/05 17:59] [saved: 03/14/05 18:01] S:\intc\M&A\Projects\2005\Seth Conference\Merrill Corp Presentation_ppt. But it¶s the push into the rarified realm of Investment Banking that sets UBS apart. it doubled its share in announced US M&A deals. WORLD¶S BEST IN ESTMENT BANK EUROMONEY 2004 ´ 15 FORBES Ž . ³BIG KID ON THE BLOCK´ ³ ´ UBS has achieved what once seemed impossible for any European investment bank: it has broken into the front rank in the US market.ppt UBS²A Leading Global Financial Services Firm Our strength is backed by industry accolades ³Wall Street Powerhouse´ FORBES 2004 The UBS Way BLOOMBERG 2004 World¶s Best Investment Bank EUROMONEY 2004 World¶s Best Bank EUROMONEY 2003 Best Investment Bank THE ECONOMIST 2003 World¶s Best Investment Bank INVESTMENT DEALERS¶ DIGEST 2002 ³ UBS is a banking giant but.

% ” ’‘ ’” ”  ” ’ —— ” ””” • • – 16 . % . % Deutsche ank Merrill Lynch Lehman ros Lazard 2 5 2 2 252 197 . Market shares do not sum to 100% due to multiple advisors on each transaction (e. target advisor and ac uiror advisor) UBS has ositioned itself as one of the leading M&A advisors worldwide and has un recedented momentum. % 10.ppt 2003±2004 Market Share versus 2000²2002 +2 % Lehman ros Deutsche ank Lazard Goldman Sachs Citigroup JP Morgan Morgan Stanley Merrill Lynch (2 %) ( (1%) (2%) (5%) (11%) +9% + % + % 12. % CSF %) ” ’”  ‘ ’ “’ ” ’   ‘ • CSF 10. Full credit given to ac uiror and target advisor(s).1% Notes: Data represents all M&A deals worldwide greater than $100 million in transaction value.g.0%  • 1 .UBS²A Leading M&A Advisor with Rapid Improvement in Market Share 2003±2004 # of Transactions / Market Share 1 oldman Sachs JP Morgan Citigroup Morgan Stanley 40 459 42 1 . e uity carveouts. exchange offers.2% 22 . % ” • 1 .. and open market repurchases 1 Market share based on number of transactions. Excludes withdrawn deals. ca turing more market share than any other bank since 2002   • . % [yuanni] [printed: 03/14/05 17:59] [saved: 03/14/05 18:01] S:\intc\M&A\Projects\2005\Seth Conference\Merrill Corp Presentation_ppt.

of Deals 4 7 8 Selected Recent Transactions ¤™™ œ £ › ¢œ › › M ay S 380 million Sale to Serena Software M arch S 4 3 million Sale to SafeNet January S 01 million Sale to Manpower January S 4 7 million Financial estructuring November US 295 million Sale to NetScreen ˜ › ¢ œ ™™   ˜ ¡ › ™™   ˜ œ › ž š™™ ™™ ¢ œ   ˜ Ÿ œ › › š ™™ February S 415 million Sale to e ay February S 850 million Sale of Selected ynCorp nits to eritas Capital November S 137million Sale to Cisco Systems July S 170 million Sale to Find hat.com M ay S 3 million Acquisition of NPTest ® ´ §ª ª§ ¬ § 11 4 ¬§ ªª § 17 ™™ ¢¢œ   ˜ ¨ § «¨¬ § « ®´« ª § §§ ª ª §ª ® ² ±° ® ©§ ¬ ¬ª« ¨ ª ©¨§ 7.[yuanni] [printed: 03/14/05 17:59] [saved: 03/14/05 18:01] S:\intc\M&A\Projects\2005\Seth Conference\Merrill Corp Presentation_ppt. . . 7 ™™ œ   ˜ «§ ´ ® ª § ¨ ¬ ™™   ˜ ­ ¦ ­ ¦ ³ ¥ ¯ µ ­ ˜ ˜ ™™ œ   ˜  œ › › . 75.4 .4 . .ppt Overview of UBS Technology M&A Group Technology M&A Ex ertise j Strong technology-focused M&A presence with deep industry knowledge and company relationships j Experienced in a wide range of advisory assignments ± Buyer advisory ± Seller advisory ± Cross-border transactions ± Merger of e uals ± Shareholder value protection ± Leveraged transactions 2004 Technology M&A Transactions Less Than $1 Billion Financial Advisor oldman Sachs Co Morgan Stanley Credit Suisse First oston BS JP Morgan anc of merica Securities LLC Citigroup Jefferies Co Lehman rothers othschild Source: SDC Rank Value ($mm) No.4 . . . 4. . 4.492.4 . 7. . 4. 48. .

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